India’s IPGL Delivers Third Batch of Port Equipment to Chabahar

“So far, the Indian company has delivered port equipment worth $24 million to this southeastern Iranian port, accounting for 28% of the total investment agreed upon as part of a build, operate and transfer (BOT) contract between Ports and Maritime Organization of Iran and IPGL,” Hossein Shahdadi was quoted as saying by IRNA.

As part of the agreement with Iran, India is committed to provide six cranes and other equipment worth $85 million to operationalize the Shahid Beheshti Terminal, which it would then run for 10 years.

The South Asian country delivered the first consignment of port equipment, including two 140-ton coastal cranes worth $8.5 million on Jan. 17 and the second batch of two 100-ton mobile coastal cranes worth $7.5 million, on March 16.

IPGL is a joint venture managed by Jawaharlal Nehru Port Trust and Kandla Port Trust for the development of ports overseas.

The bilateral contract between Iran and India was signed on May 23 for equipping, mechanizing and starting operations at the port under the first phase.

The development of Chabahar Port will help expand economic and mutual relations between India and Iran, in addition to giving a further boost to maritime trade between the two countries.

Strategic Advantage

The location of Chabahar Port has strategic advantage and high potential to provide connectivity among India, Iran, Afghanistan, Uzbekistan and other Commonwealth of Independent States countries, especially eastern CIS nations, and boost trade.

But US sanctions on Iran slowed down the port’s development and Indian officials are now counting on a thaw in relations between Washington and Tehran under US President Joe Biden to move forward with nearly $500 million of investments, according to Reuters.

Mansukh Mandaviya, India’s ports and shipping minister, said the port had already commenced operations in a limited way and the growth potential was evident.

“Chabahar Port had handled 123 vessels and 1.8 million tons of bulk and general cargoes from February 2019 to January 2021,” he said.

“This is much higher than our expectations. Imagine the scale of operations and freight saving once it is fully operational.” 

Last year, amid the pandemic, India used Chabahar Port to send 75,000 tons of wheat as humanitarian assistance to Afghanistan and 25 tons of the pesticide malathion to Iran to deal with a locust invasion.

“Chabahar Port has emerged as the connecting point for the region to deliver humanitarian assistance during the Covid pandemic,” Mandaviya said.

India also plans to set up a 600-km railroad from Chabahar Port to Zahedan, the provincial capital of Sistan-Baluchestan in Iran close to the Afghan border, at a cost of $1.6 billion to facilitate the movement of goods to Afghanistan.

The minister said New Delhi has also proposed the inclusion of Chabahar Port in the International North-South Transport Corridor (INSTC), which connects Mumbai with Moscow.

The INSTC project, proposed by India, Russia and Iran in 2000, and later supported by 10 other Central Asian countries, envisions a 7,200-km-long multimodal network of ship, rail and road for freight transport, aiming to cut carriage costs by about 30% and transit time from 40 days to about 20 days.

Rise in Domestic Investment, Local Production

Domestic investment has also increased in Chabahar over the years.

“Domestic investment in Chabahar increased from 630 billion rials [$2.5 million] in the Iranian year ending March 2015 to over 3,000 billion rials [$12 million] in the year ending March 2021. Only 20 investment contracts were signed in the year ending March 2015. As we speak, seventy-five contracts have been finalized with investors,” Abdolrahim Kordi, the director of Chabahar Free Zone Organization, said in April.

“The Iranian year ending March 2018 could be regarded as a turning point in the history of foreign investments in Chabahar, as upwards of $63 million in foreign investment were materialized. However, the US sanctions drove down investment to $7 million in the fiscal 2018-19. The figure rebounded in the following year and has remained on an upward trajectory. As much as $16 million in foreign investment were made in Chabahar in the year ending March 2021,” he added. 

“The value of products made in Chabahar has increased 6.2-fold over the past eight years from 1,240 billion rials ($5 million) to 7,728 billion rials ($31 million),” the official said, adding that a total of 245 companies were registered in Chabahar Free Zone in the year ending March 2015. 

The number of registered companies increased to 489 in the year ending March 2019; 228 and 180 more firms were added in the year ending March 2020 and March 2021, respectively. A total of 290 manufacturing enterprises and 2,555 new jobs were created in Chabahar last year.